Controls on gas prices will be extended to mid-2025 in an attempt to take the sting out of spiralling energy bills for cash-strapped households and businesses.

The temporary wholesale price cap of $12 per gigajoule will be extended by 18 months to July 1, 2025, and a proposed code of conduct will lock in a provision for reasonable pricing.

Energy Minister Chris Bowen said the measures would ensure high gas costs did not return for consumers when the federal government’s market intervention ended.

“There will still be price rises, but nowhere near as big as it would have been,” he said.

The emergency market intervention was imposed last December, after average gas prices had almost tripled since 2019 amid supply shortfalls and war in Ukraine.

Wednesday’s promise came as the latest figures showed Australia’s annual inflation rate slowed to 7 per cent in the March quarter – though it remains substantially above the Reserve Bank’s target rate of 2-3 per cent.

Australian Bureau of Statistics data on Wednesday showed prices are growing more slowly than in the December quarter, when annual inflation hit 7.8 per cent. Household energy bills remain a significant driver of high inflation.

Quarterly inflation growth rose 1.4 per cent in the March quarter. ABS head of price statistics Michelle Marquardt said that was the lowest quarterly rise since December 2021.

“While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters,” she said.

Gas and household fuels (up 14.3 per cent) were among the most notable drivers of inflation in the past three months. Gas prices rose sharply in all capital cities, with Melbourne leading the way with a jump of 22.7 per cent.

“This quarter’s rise was notable as prices increased in all eight capital cities, whereas typically only Melbourne’s prices are reviewed in the March quarter,” Ms Marquardt said.

Other areas to have big price jumps in the three months were tertiary education (up 9.7 per cent), domestic holiday travel and accommodation (up 4.7 per cent) and medical and hospital services (up 4.2 per cent).

Treasurer Jim Chalmers said the gas code of conduct would ensure sufficient supply of Australian gas for Australian users at reasonable prices and give producers the certainty they need to invest in supply.

It would also ensure Australia remained a reliable trading partner by allowing liquefied natural gas producers to meet export commitments, Dr Chalmers said.

Coupled with a cap on coal costs for power generators, gas price caps under the federal energy price relief plan had nearly halved wholesale energy prices, he said.

Gas consultation underway

Also on Wednesday, the last round of consultation was to begin on the government’s code for gas suppliers before the guidelines are finalised by the end of the financial year.

Under the proposed code, small gas producers will be exempt from the price cap if they supply only the domestic market. Exemptions from the price cap will also be dependent on court-enforceable supply commitments that satisfied the consumer watchdog.

Energy Minister Chris Bowen said the code of conduct would ensure high gas costs would not return for consumers following the end of the price cap.

“This is all about cutting the link between very volatile international gas prices, and the prices Australian industries and households pay for Australian gas,” he told ABC Radio on Wednesday.

“It means Australian industries and households get access to Australian gas that’s under Australian soil and Australian waters at a reasonable price.”

Talks have already been held with large industrial gas users about what the code would look like.

Mr Bowen said it was time to expand the consultation to ensure the right balance was struck.

“What we are seeking to do is increase the supply of gas into the domestic market, particularly in some of the years in which we’re facing projected shortfalls like 2027,” he said.

“[The code] strikes a good balance, but we want to see what the broader industry and Australian community think.”

There will also be a review of the code within two years of it starting, to ensure it remained fit for purpose.

The initial price caps were enforced following spiralling gas and energy prices in the wake of Russia’s invasion of Ukraine in 2022.

Mr Bowen said the price caps would take the sting out of the rising power costs.

“The Australian Energy Regulator was very clear with us, that price rises we would have been seeing now would have had a five in front of it, a 50 per cent or so price rise, absent of intervention,” he said.

“We intervened, there will still be price rises, but nowhere near as big as it would have been.”

Consultation on the gas code will be open until May 12.

– with AAP